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New Scientist Live

US to regulate Bitcoin currency at its all-time high

LOOKS like Bitcoin has got too big to ignore. Virtual currencies are to be regulated by the US Treasury after the Financial Crimes Enforcement Network (FinCEN) moved to clarify their status under anti-money-laundering laws.

The status of virtual currencies such as Bitcoin is to be clarified under anti-money-laundering laws

The move comes as Bitcoins doubled in value in just a few weeks to hit a record high of more than &dollar;70 each, possibly fuelled by the banking crisis in Cyprus and the rest of Europe.

Bitcoin is run on a decentralised network controlled by its users, making it difficult to regulate transactions within the currency. However, exchanges that swap Bitcoins for real-world currencies, such as MtGox, are another matter.

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FinCEN’s new guidelines don’t mention Bitcoin by name, but say that anyone involved in exchanges of decentralised virtual currency for real currency must register as a money services business and obey existing regulations. The same applies for centralised virtual currencies, such as Facebook credits.

But in a peer-to-peer currency it is not so obvious what counts as an exchange. Bitcoin “miners”, who run software to create Bitcoins, might also have to register if they sell the newly minted currency for its real equivalent. Patrick Murck of the advocacy group Bitcoin Foundation called the guidelines “infeasible for many, if not most, members of the Bitcoin community to comply with”.